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Insolvency FAQs

How do I make myself bankrupt?

Go to the court within whose jurisdiction you live, obtain the forms and find out how much the fee will be. Fill out the forms and return to court with the fee payable. Above all take advice before you take what is a very major step.

You may also find it helpful to read the Insolvency Service publication “Dealing with debt – How to petition for your own bankruptcy”.

How do I make someone else bankrupt?

Instruct a lawyer, but be aware that this is likely to cost you over £1500. But at Hylton-Potts we provide highly cost-effective fixed fees.

Can I have a bank account?

There is nothing in the insolvency legislation which prevents a bankrupt from holding an account, but you should tell the bank or building society that you are bankrupt, since they may wish to impose conditions and limitations e.g. not allow a cheque guarantee card. You should not obtain overdraft facilities without telling the bank that you are bankrupt.

Note: it is the bank’s decision as to whether to allow an account to be opened by the bankrupt. We at Hylton-Potts can often introduce you to a bank that will accept you as a customer.

I have obtained my discharge, but am still unable to obtain credit, as my name is included on a credit reference agency’s records. Will the Official Receiver arrange for the removal of the listing as I now have my discharge?

The Insolvency Service has no regulatory responsibility for credit reference agencies and cannot assist directly in the correction of information held. If you have any questions about the operation of the agency or its listing policy please contact that agency.

Although credit reference agencies will update their records upon receipt of a certificate of discharge, a bankruptcy order is kept on the credit reference agencies’ files for six years from the date the order was made.

Can a bankrupt still trade?

If you are bankrupt you are still allowed to earn a living, and can do this by being self-employed or by carrying on a business, as long as you do not disobey the law by obtaining credit of £500 or more without disclosing that you are an undischarged bankrupt, and as long as you do not use another name unless you tell those with whom you trade of the name under which you were adjudged bankrupt. If you earn more than sufficient to meet the reasonable domestic needs of yourself and your family, the Official Receiver may apply for an Income Payments Order (IPO). We at Hylton-Potts can advise on how much the Official Receiver is likely to allow you to learn.

I am an employee of an insolvent. Am I allowed to claim wages?

The Redundancy Fund may pay claims for unpaid wages, holiday pay and wages in lieu of notice, up to certain prescribed limits, and redundancy claims. We at Hylton-Potts can advise on this for a fixed fee of £295 including VAT.

When will I be discharged?

If the bankruptcy order was made on or after 1 April 2004 the automatic discharge date is one year.

If the bankruptcy order was made before 1 April 2004 different rules apply

Note: Your discharge may be suspended if you have failed to carry out your duties under The Insolvency Act.

How do I obtain a certificate of discharge?

We at Hylton-Potts can obtain this for you from fixed fee of £150 including VAT and the court fee.

If I am made bankrupt, will I still have to repay my student loan?

Yes. They remain the responsibility of the (former) student to repay within the terms of the loan arrangement.

If you were made bankrupt before 1 September 2004 you may still have to repay your student loan.

What is a centre of main interest?

Under the EC Regulation on Insolvency Proceedings if you live in a member state, except Denmark, you can only open insolvency proceedings (make yourself bankrupt) in the country where you have your “centre of main interests”.

There is no definition of a centre of main interests but the Court will usually regard the country where you carry on a business or earn your living as your centre of main interest. The Court will also consider the place where you normally live, i.e. your country of habitual residence. If you are not employed or self-employed your centre of main interests will be the country you normally live in at the date of the petition. We at Hylton-Potts can advise you on going bankrupt in the United Kingdom, and how it affects European debts.

If my house is sold sometime after the bankruptcy order is any shortfall on the mortgage still a debt in my bankruptcy?

A debt which is secured by a mortgage or a charge on a property is still a provable bankruptcy debt. The mortgage loan company is “a secured creditor” which means they have rights over an asset, the house, and can require the asset to be sold to pay their debt. These rights are not affected by the bankruptcy.

On the making of a bankruptcy order the mortgage loan company could make a claim in the proceedings but, unless it wished to give up the security, could only claim for any (estimated) shortfall.

If you continue to live in the property it is likely that you will continue to make payments to the mortgage loan company to avoid the property being re-possessed. When the property is eventually sold any shortfall to the mortgage loan company is still a provable debt in the bankruptcy, even if you have been discharged, as you are released from the debt on discharge.

Your bankruptcy does not affect the obligations of any joint owner who has not been made bankrupt to repay the mortgage loan debt or any shortfall, as they are still liable for the whole of the debt.

After the date of the bankruptcy order the mortgage loan creditor may ask you to sign a “deed of acknowledgment” of the outstanding debt. If you have signed such a deed the mortgage loan creditor can take action against you to recover any shortfall following the sale of the property.

At Hylton-Potts we can advise in detail for highly competitive fixed fees.

I am based in England and Wales and I am owed money by someone who is subject to insolvency proceedings in another country, how can I let the person dealing with the proceedings know about my claim?

If the insolvency proceeding is in a country that is a member of the European Union (except Denmark) then the person dealing with the insolvency has to provide you with information about how, and when, to submit a claim. When you make the claim, it can be made in English (or Welsh), but must be headed with the phrase “Lodgement of Claim” in one of the main languages used by the country in which the proceeding is taking place.
If the insolvency proceeding is in a country that has put an international agreement known as the UNCITRAL Model Law into law then the person dealing with the insolvency has to provide you with information about how, and when, to submit a claim. A list of the countries that have put this agreement into law can be viewed at http://www.uncitral.org/uncitral/en/uncitral_texts/insolvency/1997Model_status.html#$35287.

Other countries may have laws dealing with the provision of information to people who are owed money, and the submission of claims. It is not possible to give detailed information here and, ultimately, but Hylton-Potts we offer specialist assistance, for a fixed fee.

I do not live in England and Wales but in another country where I have a lot of debts. Can I go bankrupt in England or Wales and write off the debts in the country where I live?

If you are living in a European Union Member State (except Denmark) a bankruptcy order made in England and Wales will be accepted in all EU countries. Before the Court will make a bankruptcy order you must show that your “centre of main interests” is in the UK.

The court will usually regard the country where you carry on a business or otherwise earn your living as your centre of main interests. If you are unemployed or self-employed your centre of main interests will be the country you normally live in at the date of the petition.

Therefore, if you live or work in the another country of the EU (apart from Denmark) you cannot go bankrupt in England and Wales.

If you intend to re-locate to the UK and establish your centre of main interests here, to take advantage of personal insolvency legislation, you should be aware that the official receiver will investigate the truth of your move. If your re-location is only temporary or false, for example if you continue to work in the country where you formerly lived, the Court can rescind (remove) the bankruptcy order.

If you live in another part of the World (or Denmark) you can make yourself bankrupt in England and Wales if:

(a) you are personally present in England and Wales on the day you present your petition for bankruptcy to the court, or

(b) if you have lived or carried on business in England and Wales in the previous three years.

The country in which you live may not recognise the bankruptcy proceedings and creditors may still be able to take action against you in the country you live in. Those countries that have put an international agreement known as the UNCITRAL Model Law into law are more likely to recognise a bankruptcy order made in England and Wales.

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